Energy supplier Iresa collapses after record number of complaints
Failure of UK’s cheapest utility firm prompts calls for financial checks for new providers
The UK’s cheapest and most complained-about energy supplier has ceased trading, in a collapse that has prompted calls for tougher tests on new entrants to the market.
The energy regulator Ofgem said Iresa’s 100,000 customers would not see an interruption to their electricity and gas supplies and should “sit tight” until it appointed a new supplier. Iresa had already been banned from taking on new customers since March because of its customer service failings. Its failure on Friday followed the collapse of the small suppliers Future Energy in February and GB Energy in 2016.
The cost of appointing a new energy firm, a process known as supplier of last resort, is borne by all energy bill payers. The closure of GB Energy, which had 160,000 customers, cost £14m. Iresa came bottom of a recent ranking of energy companies’ customer service, with a record high of 9,000 complaints per 100,000 customers. In one egregious case, a customer switched away from Iresa to a new supplier only to find their credit balance had been wiped, and they had yet to receive a reply from Iresa.
Ofgem said households supplied by the firm should take meter readings as soon as possible and wait to be contacted by a new company appointed by the regulator. It is not known yet which companies are in the frame. “If you are an Iresa customer there is no need to worry as we will make sure your energy supplies are secure and your credit balance is protected,” said Rob Salter-Church, Ofgem’s interim executive director for consumers and markets.
The consumer group Citizen’s Advice advised customers against switching supplier now as they may lose refunds owed to them. Medium-sized suppliers including Shell-owned First Utility and Cooperative Energy have been among those in the industry warning that some small firms would soon collapse. Rising wholesale energy prices this year have put extra pressure on companies. In total, four energy suppliers have gone bust since 2008, according to Ofgem.
Martin Lewis, the founder of MoneySavingExpert.com, said increased competition from challenger suppliers was important, but not at any cost. “It is time that much stricter tests were set up before firms are granted licences,” he said. Ofgem recently launched a review that could lead to new energy suppliers facing financial health checks.
Iresa’s website offered no apology to households but said: “Customers need not worry, their supplies are secure and credit balances are protected.”
News source: The Guardian